Jennifer Hendrickson
I recently attended the national Murphy Business conference in Palm Coast, Florida. The beach was nice (although it rained the whole time) and the opportunity to network with other business brokers across the country is a big draw, but the biggest benefit is staying up-to-date with all the latest developments that affect our buyers and sellers. A lot can change in a year and the best business brokers out there never stop learning.
Here are just two things that I learned at the conference that you might find interesting as you consider buying or selling a business:
- The Small Business Administration (SBA) is still a great way to fund a business purchase. There are; however, a few changes to the SBA program effective January 1, 2018 that I wanted to highlight for you:
- Franchise systems must be listed on the SBA’s Franchise Directory in order to be eligible for the program.
- The SBA now requires a minimum owner equity injection of 10%. On the bright side, the 24-month standby period on seller carryback debt has been eliminated.
- Banks now have more flexibility on loans $350,000 or less.
We have local and national SBA lenders who are well versed in these changes (and many more) and can make sure you are able to leverage them when buying a business.
- The tax law changes that have gone into effect this year have certainly caused a lot of buzz both for individuals and businesses. The most common question from business sellers is: “Does the new 20% deduction apply to sale proceeds?” Unfortunately not. But there still needs to be a healthy discussion about ways to manage your tax impact upon sale. Among other things you need to 1) fully understand the benefits and consequences of receiving all tax proceeds at closing; 2) consider receiving payments over time to manage your tax bracket; and 3) manage the asset allocation prior to sale. This is a major point of discussion and the answers vary greatly depending on your circumstances. We at Murphy Business stay abreast of these tax law changes and, in the more complicated cases, we have partners who are experts in managing your tax impact upon sale.
So many changes took effect in 2018 that are affecting our clients. Know that we at Murphy Business of Cape Girardeau are on top of them and will make sure that you understand how to best leverage the new rules going forward. When you’re ready to start the conversation about buying or selling a business, contact us.
